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PAGE 1
GRADE
Value of a Loonie
In this lesson, students identify the factors that affect foreign exchange rates and learn how to optimize their personal buying power when exchanging money for travel.
Subject CGG3O – Travel and Tourism, A Regional PerspectiveBBB4M - International Business
Suggested Timing 70 minutes
Financial Literacy Objectives
At the end of this lesson, students will: • usefinancialterminologyfluently;• comparethecostsassociatedwithvariousspendingscenarios;
• analyzefinancialdatafromavarietyofsourcestomakefinancialdecisions;
• understandeffectofcurrencyfluctuationsontheeconomy;
• comparecurrentandhistoricaltrendsinmoney.
Curriculum Expectations
Canadian and World Studies, Grade 11 and 12 (2005) Travel and Tourism (CGG30)
Understanding and Managing ChangeAnalyzetheeffectsofpolitical,economic,cultural,andenvironmentalmotivatorsandbarriersontravelandtourismpatterns(e.g.,currencyfluctuations).
Business Studies, Grades 11 and 12 (2006) International Business Fundamentals (BBB4M)
The Global Environment for Business• DemonstratenumeracyskillsbyconvertingavarietyofinternationalcurrenciestoCanadiandollars.
• Identifythefactorsthataffectforeignexchangerates.
11/12
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GRADE 11/12Value of a Loonie
Assessment Review:ForeignExchangeinAction(AppendixE)
What You Need • Internet/computer/projector(optional)• Worldmapandcurrencyvalues(AppendicesA,B)• CurrencyMatchActivity(AppendixC)• StrongCanadianDollar:GoodforEveryone?(AppendixD)• ForeignExchangeinAction(AppendixE)
Minds On Beginthelessonbyaskingstudentsiftheyorsomeonetheyknowhastakenatripthatrequiredcurrencytobeexchanged.
Toassessknowledgeofglobalcurrencies,invitestudentstocompletetheCurrencyMatchQuizbydisplayingitonscreenorbyprovidingahandout(AppendixC).
Takeupanddiscusstheanswersasaclass.
Distributealistofcurrenciesandexchangerates(AppendixB)ordisplayavarietyofratesonscreen.Provideeachstudentwithan8”x11’’worldmap.
Usingstickydotsorthedotofapen,havestudentsindicateplacesonthemapwheretheyhavetravelled,aswellasplaceswheretheywouldliketotravel. Askstudentstocircletheirnumberonetraveldestinationonthemapandhavethemsharetheirchoicewithaclassmate.
Context for LearningBillFoldisacharacterwhoisconstantlygettinghimselfintofinancialscrapes. Usethescenariobelowtoprovidestudentswithacontextforlearning.
BillFoldhassaved$500forhisplannedtriptoEurope.Hisfriendtellshimthathe’llneedtoconverthisCanadiancashintoEurosbeforeheleaves.Exchangerates???Conversions???Billisbaffled.
Action Instruction:IntroducetheForeignExchangemarketandprovideafewfactsaboutwhatitisandhowitoperates.
Takestudentsthroughthesampleproblembelowtohelpthemunderstandthecostofconvertingonecurrencytoanother.
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GRADE 11/12Value of a Loonie
Action (continued)
Sample ProblemThe ratio of the value of a unit of Currency A to the value of a unit of Currency B is 1.5: 1. How many units of Currency A do you need to buy 100 units of Currency B?
Showthecalculationontheboard.
Invitestudentstocalculatetherateon$100CADiftheyneededtoexchangecurrencyinordertotraveltotheirchosencountry.Havestudentsdiscussfindingsandcompareratesasaclass.
Encouragediscussionbyaskingthefollowing:Whydoyouthinkexchangeratesfluctuateovertime?HowdoestheCanadiandollarstandupagainstothercurrencies?
Emphasizesomeofthepolitical,cultural,andenvironmentalmotivatorsthataffectcurrencyrates(e.g.,earthquakeinJapan).
Discusspossibleimplicationsofchangingratesontravelandtourism,businessandforeigninvestment.
Read Aloud Distributethehandout,StrongCanadianDollar:GoodforEveryone?(AppendixD)andhavestudentvolunteersreadaloudtheprosandconsofbothastrongandweakCanadiandollar.
Introducetheterm“purchasingpower”anddiscusshowpayingattentiontoexchangeratesmighthelpapersonsavemoneywhentravellingtoanothercountry.
Activity: Exchange Rate Reaction!Tohelpstudentsvisualizeandreviewwhathappenstopurchasingpowerwhenthelooniegoesupordown,splittheclassintwo.Tellstudentsthatthespatialdivisionbetweenthetwosidesisapoliticalborder.Explainthatonesideoftheclass represents Canada and Canadian consumers, while the other side represents consumersfromaforeigncountry.
Placeachairatthefrontoftheroom.Explaintotheclassthatyouwillrepresenttheforeignexchangemarket.Whenthevalueofthelooniegoesupordown,explainthatyouwilldemonstratethisshiftbystandingorsittinginthechairatthefrontoftheroom.
The group of students representing Canadian consumers should then respond to thechangeinthecurrencyratebyeitherstandingasagroup(toindicatethattheshiftwillresultinincreasedpurchasingpowerfortheconsumer)orremainingseated(to indicate that the rate change will result in decreased purchasing power for the consumer).Askstudentsontheothersideoftheroom—thoserepresentingforeignconsumers—toreactinthesamewaytoshowhowtheriseandfallofthelooniewillaffecttheirpurchasingpower.
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GRADE 11/12Value of a Loonie
Action (continued)
Usethefollowingexamplesaspromptsforthisactivity:
1. Loonie Value Up = Canadian Purchasing Power Abroad Up: CADworthmoreandbuysmoreforeigngoods/services.(Inthisinstance,theteacherstandstoshowthe rise of the dollar, the Canadian consumer group should stand to show the rise in purchasing power up and the foreign group remains seated to show a decrease intheirpurchasingpower.)
2. Loonie Value Up = Foreign Purchasing in Canada Down:WhenCADistoostrong against foreign currencies, foreign businesses/nations get fewer dollars whenexchangingtheircurrency.TheythereforetendtopurchasefewerCanadiangoods/services.(Studentsassignedasforeignconsumersremainseated.)
3. Loonie Value Down = Canadian Purchasing Power Abroad Down:SinceCADvalue is down, it is worth less and will therefore purchase fewer foreign goods and services.(Canadianconsumergroupshouldremainseated.)
4. Loonie Value Down = Foreign Purchasing in Canada Up:IfCADisweak,foreignbusinesses/nationswillmostlikelypurchasemoregoods/services. (Studentsassignedtoforeigncountrystand.)
RepeatpromptsuntilitisclearthatallstudentsunderstandhowfluctuationsinCanadiancurrencyimpactpurchasingpower.
FormgroupsandinvitestudentstocompletethehandoutForeignExchangeinAction(AppendixE).
Consolidation/ Debrief
TakeupanddiscusstheanswerstotheForeignExchangeinActionhandoutasaclass.
Discussthefollowingorusethesequestionsasaticketoutthedoor:• Whydoyouthinkthatcurrencyvariesfromcountrytocountry?• WhatarethebenefitsanddrawbacksofahighCanadiandollarand/orlowCanadiandollaronyouasaconsumer?
• Whatshouldbekeptinmindaboutfluctuationsincurrencyvalueswhentravelling?
• Whatshouldbekeptinmindwhendoingbusinessorinvesting?
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GRADE 11/12Value of a Loonie
World Map
A p p E n D i x A
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GRADE 11/12Value of a Loonie
Currency Values (March 2012)
Canadian Dollar Values1 CAD in CAD
AmericanDollar 0.972224 1.02857
Argentine Peso 4.64717 0.215185
AustralianDollar 0.971932 1.02888
BrazilianReal 1.79493 0.557125
British Pound 0.622329 1.60687
Bulgarian Lev 1.42582 0.701349
Chilean Peso 510.195 0.00196004
Chinese Yuan 6.1805 0.161799
Colombian Peso 1913.96 0.000522477
Croatian Kuna 5.4684 0.182869
DanishKrone 5.42225 0.184425
EurozoneEuro 0.729022 1.3717
HongKongDollar 7.57665 0.131984
HungarianForint 225.326 0.00443801
Icelandic Krona 116.328 0.00859642
Indian Rupee 50.6094 0.0197592
Indonesian Rupiah 8902.37 0.00011233
IsraeliNewShekel 3.68156 0.271624
JapaneseYen 75.687 0.0132123
Latvian Lats 0.508857 1.96519
Lithuanian Litas 2.51716 0.397272
MalaysianRinggit 3.08048 0.324625
MexicanPeso 13.5705 0.0736893
NewZealandDollar 1.27717 0.78298
Norwegian Krone 5.72246 0.17475
PakistaniRupee 85.8492 0.0116483
Philippine Peso 42.4101 0.0235793
Romanian Leu 3.17256 0.315203
Russian Ruble 30.4804 0.032808
SingaporeDollar 1.26164 0.792616
SouthAfricanRand 8.12655 0.123053
SouthKoreanWon 1110.81 0.000900241
SriLankanRupee 110.595 0.00904198
SwedishKrona 6.72121 0.148783
SwissFranc 0.895385 1.11684
TaiwanDollar 29.5367 0.0338561
Thai Baht 30.4112 0.0328827
Trinidad/TobagoDollar 6.21354 0.160939
TurkishLira 1.8001 0.555524
VenezuelanBolivar 4.17606 0.23946
A p p E n D i x B
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GRADE 11/12Value of a Loonie
Currency Match Activity
Match the following countries with their currencies:
1. Australia a. Won
2. England b. Peso
3. Venezuela c. Shekel
4. Germany d. Euro
5. Switzerland e. Dollar
6. SouthAfrica f. Pound
7. Japan g. Krone
8. Mexico h. Rupee
9. India i. Rand
10. China j. Yuan
11. SouthKorea k. Franc
12. Russia l. Rial
13. Denmark m. Yen
14. Iran n. Bolivar
15. Israel o. Ruble
A p p E n D i x C
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GRADE 11/12Value of a Loonie
Currency Match Activity – Answers
Match the following countries with their currencies:
1. Australia a. Won
2. England b. Peso
3. Venezuela c. Shekel
4. Germany d. Euro
5. Switzerland e. Dollar
6. SouthAfrica f. Pound
7. Japan g. Krone
8. Mexico h. Rupee
9. India i. Rand
10. China j. Yuan
11. SouthKorea k. Franc
12. Russia l. Rial
13. Denmark m. Yen
14. Iran n. Bolivar
15. Israel o. Ruble
A p p E n D i x C
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GRADE 11/12Value of a Loonie
Strong Canadian Dollar: Good for Everyone?
WhentheCanadiandollarisstrong or increases in value against other currencies, the following situations will mostlikelyoccur:
Pros Cons
Foreigngoodsandserviceswillcostless,makingitcheaperforCanadianbusinessestoimportfromforeigncountries.Consumersbenefitbecauseimportpricesongoodsdecrease.
ForeignbusinesseslesslikelytoimportfromCanadabecausetheycantrademoregoodsfortheirmoneywithadifferentcountrythathasacurrencyweakerthanthedollar.
CheaperforCanadiancitizenstotravelabroadsinceconsumerswillgetmorefortheirCanadiandollars(e.g.,food,hotels,souvenirs).
Canadalesslikelytoexportgoodswhendollarisstrong;thus,foreigndemandforgoodswilldecrease.Whenthishappens,Canadiancompaniessufferasaresultofreducingtheirinternationalsales.
Generally,aforeigncountrywillbuyagriculturalexportscheaperfromacountrywithaweakercurrencyexchangeratethantheCanadiandollar.
This means that Canadian farmers will develop a surplus of crops, leadingtolowerprices.Gettinglessmoneyfortheircropsisadisadvantagetofarmers.
TheCanadiantradedeficitincreasessinceweareimportingmorethanweareexporting.
WhentheCanadiandollarisweak or decreases in value against foreign currencies, the following situations willprobablyoccur:
Pros Cons
WhenothercurrenciesarestrongrelativetotheCanadiandollar,internationalfirmswillbeabletopurchasemoreproductsfromCanada,resultinginanincreaseinexports.
AweakCanadiandollartranslatesintohighercostsforCanadianbusinessestoimportgoods.Thesecostsarepassedontotheconsumer.Whenthishappens,thepriceofgoodstendstorise.
Whenweexportmoregoodsabroad,weneedmorepeopletoproducethoseproducts,soouremploymentrategoesup.
Whenwegetlessofanation’scurrencyforourdollar,itcostsmoreforCanadianstotravelabroad.
Whenweexportmorethanweimport,thetradedeficitdecreases.
LessforeigninvestmentinCanadianTreasurybillsmeanslessmoneytofinancegovernmentexpenditures.
Whenourdollarisweak,othercountriescanpurchaseCanadiangoodsandservicesatalowerprice.Forthatreason,goodssuchas agricultural products are in high demand and farmers can expectariseonmostcropandlivestockprices.
AweakdollarattractsforeigninvestmentinCanada;thus,ourreal estate, businesses, and other investments become good investmentsforinternationalinvestors.
A p p E n D i x D
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GRADE 11/12Value of a Loonie
Foreign Exchange in Action
YouandyourfamilyaregoingtoNewYorkCitytovisityourrelatives.
1. YouneedUS$2000inspendingmoney.CalculatehowmuchthatwillcostyouinCanadiandollars.
2.YouhavejustarrivedinNewYork.Inthepastweek,fromthetimethatyoutradedyourmoneyuntiltoday,theCanadiandollarhasdecreasedinvaluetoUS$0.9683.Wasitbettertotradewhenyoudidorwouldithavebeenbettertotradetoday?Explain.
3.Anotherweekpasses,andtheCanadiandollarisnowdownto$0.9601.YouwanttogototheSixFlagsGreatAdventureThemeParkbutyou’vealreadyspentallyourAmericanmoney.YouhaveCAD$120inyourpocketandthetripcostsUS$100,includingparkadmission,transportation,andlunch.Doyouhaveenoughmoneytogo?Showyourwork.
4.Beforeyouleave,yourcousinBenasksyoutosendhim50bagsofketchupchipsbecausetheydonotsellthemintheUnitedStates.TheCanadiandollarisnowdowntoUS$0.9444.
i) EachbagofchipscostsCAD$2.50.HowmuchmoneywillBenhavetoexchange,inUS$,tobuythechips?
ii) IsthedecreasingvalueoftheCanadiandollaroverthepastfewweeksgoodforBen’spurchase?Explain.
A p p E n D i x E
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